Good afternoon. My name is Lisa and I will be your conference operator today. At this time, I would like to welcome everyone to the Vaxcyte Fourth Quarter and Full Year 2022 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I now would like to turn the call over to Andrew Guggenhime, President and Chief Financial Officer of Vaxcyte. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. I'd like to welcome you to Vaxcyte's earnings conference call to discuss our 2022 results and to provide a business update. I am joined today by our Chief Executive Officer, Grant Pickering; our EVP and Chief Operating Officer, Jim Wassil; and our VP of Research, Jeff Fairman. Earlier this afternoon, we issued a news release announcing our results. Copies of this and our other news releases, latest corporate presentation and SEC filings can be found in the Investors and Media section of our website. Before we begin, I'd like to remind you that during this call, we will be making certain forward-looking statements about Vaxcyte, which are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from those referred to in any forward-looking statements. For a discussion of the risks and uncertainties associated with these statements, please see our press release issued today as well as our most recent filings with the SEC, including the risk factors set forth in our Form 10-K for the year ended December 31, 2022, and any subsequent reports filed with the SEC. With that, I'll turn the call over to Grant Pickering. Grant?

Thank you, Andrew, and to all of you on the call and webcast, thanks for joining us today. 2022 is a landmark year for Vaxcyte. We reported positive and unprecedented proof-of-concept top line clinical data for VAX-24, our lead pneumococcal conjugate vaccine for the prevention of invasive pneumococcal disease in adults. These remarkable data validate our PCV franchise and our carrier-sparing approach for broad-spectrum PCVs as well as our cell-free platform. They also represent the culmination of nearly a decade of thoughtful and methodical research and development by the entire Vaxcyte team and our partners. The findings of the large Phase 2 study in adults 18 to 64 years of age indicate a potential best-in-class profile for VAX-24 and demonstrate how our novel cell-free technology platform has the capability to overcome the limitations of other conventional approaches. These results and the foundation we have carefully created have us well-positioned to advance our PCV franchise to potentially disrupt what has consistently been a crucial vaccine class, both societally and financially. I'm incredibly proud of the progress this past year, and I'm optimistic about our ability to execute and further scale our business in 2023 and beyond. As we look ahead, we remain focused on advancing both of our PCV franchise programs, VAX-24 and VAX-31, which we previously referred to as VAX-XP, with several upcoming milestones. VAX-24, our lead PCV candidate, was recently granted Breakthrough Therapy designation for adults, adding to its fast-track designation, and we remain on track to deliver top line safety, tolerability and immunogenicity results in subjects 65 and older in the second quarter of this year. As we've discussed with many of you, for this pending readout, our focus from an immunogenicity perspective is almost exclusively on the point estimates for the OPA geometric mean ratios, or GMRs, and their comparability to the prior results in our much larger Phase 2 study in younger adults. Given the smaller size of this older adult trial at 50 subjects per cohort, these point estimate GMRs are the most important focal point and not the lower bounds of the confidence intervals. This study was not powered to meet the regulatory non-inferiority standard and, as a result, these confidence intervals will be substantially wider. The combined data from both adult Phase 2 studies will enable us to perform the statistical powering necessary to our pivotal Phase 3 non-superiority study for VAX-24 in adults. These data, along with the full six-month safety data from both studies, will facilitate our end of Phase 2 meeting with the FDA, which we expect to hold in the second half of this year. To put the U.S. adult PCV market opportunity in context, it is approximately $2 billion of the $7 billion total annual global market and is expected to be the fastest growing segment of the market going forward. Key growth drivers include an increase in adult vaccination rates outside the U.S., and in the U.S., the potential shift to universal adult vaccination starting at age 50 instead of age 65, which itself would expand the market and open up the adult regimen to a prime blue schedule, as is the case in the input market. The infant cohort represents the largest portion of the global pneumococcal vaccine market with approximately $5 billion in annual sales, and we are thrilled to be launching our first clinical program in infants in the second quarter of this year. This follows FDA clearance of our IND application, which we announced last week. Bringing the broadest PCV to both infants and adults represents an opportunity to significantly reduce invasive disease across the entire population. To maintain a long-term leadership position in this market and to address the serotype replacement phenomenon that we would expect, based on the widespread use of the 24-valent PCV, we continue to invest in our 31-valent VAX-31 program. Similar to VAX-24, we believe our unique carrier-sparing PCV approach gives us the opportunity to expand the spectrum of coverage to address additional pathogenic serotypes without compromising the ability to continue to vaccinate against previously circulating strains. This is critical since previously controlled strains have rebounded in prior instances where vaccine coverage was withdrawn. This puts Vaxcyte in a different position than other sponsors who are applying the conventional PCV approach and are forced to make sacrifices in an attempt to cover newly circulating strains. We have continued to make significant investments in the advancement of VAX-31 and expect to submit the adult IND for this program in the second half of this year and deliver top line data next year. Beyond our PCV franchise, we continue to progress and bolster our early-stage pipeline of novel vaccines, including VAX-31, a conjugate vaccine candidate designed to prevent infections in both adults and children caused by Group A Strep bacteria, and VAX-PG, which is designed to treat periodontal disease. We are also introducing a new program called VAX-GI, a vaccine designed to prevent Shigella, a dangerous bacterial infection with significant mortality rates among infants in low and middle-income settings. Jeff will provide additional details on our earlier-stage programs later on today's call. Given the magnitude of the opportunity for our PCV franchise, we continue to invest to further solidify our manufacturing foundation. Our strategic relationship with Lonza remains strong, and we believe we are well positioned to support a potential adult VAX-24 launch in the U.S. market out of existing Lonza facilities. Plans to ensure and expand our commercial manufacturing footprint to support the infant indication and ex-U.S. markets are underway. Additionally, we further fortified our extract supply chain via our recent expanded agreement with Sutro Biopharma. From a financial perspective, we are in a strong position with over $950 million on the balance sheet as of December 31, aided by two successful follow-on financing rounds last year totaling $805 million in gross proceeds. This financial strength provides us the capital to fund through several important incremental milestones, which Andrew will highlight later. I'll now turn it over to Jim, who will provide more details on our PCV programs.

Thanks, Grant. I'd like to start by reiterating why developing broader coverage vaccines to treat pneumococcal disease matters. Despite widespread administration of effective vaccines, the global impact of disease remains significant and is associated with high case fatality rates, antibiotic resistance and meningitis. In the U.S. alone, adult and pediatric pneumococcal vaccines only cover approximately 60% and 41%, respectively, of circulating disease. As a result, the public health community continues to affirm the need for broader spectrum vaccines to prevent invasive disease or IPD. We designed VAX-24 to deliver a PCV that includes all of the serotypes covered by the currently marketed vaccines. As confirmed by our strong clinical results from the Phase 1/2 proof-of-concept study, VAX-24 has the potential to provide an additional 10% to 28% of protection for adults compared with the standard-of-care PCVs. In this study, VAX-24 met the approval non-inferiority threshold for all 24 serotypes and exceeded the immune response of PCV20 for 16 of the common 20 serotypes. Four of those demonstrated statistically superior responses. Based on these results, we believe we have the opportunity to set a new bar for the pneumococcal vaccine by delivering broader coverage and higher immune responses relative to the conventional PCV. Looking ahead, we expect top line data for our second Phase 2 study in adults 65 and older in the second quarter of this year. With the upcoming second-quarter data readout, I want to provide a bit more context about our objectives and the expectations for this study. As a reminder, the study design is identical to the first Phase 2 study, but for the age and the number of subjects at 50 subjects per cohort versus nearly 200 in the first Phase 2 study. This smaller study was designed to further inform the powering of the pivotal Phase 3 study while adding to the body of research for VAX-24. As Grant mentioned, it was not powered to demonstrate non-inferiority. So, it is most important to focus on the point estimates for the OPA-geometric mean ratios for each of the serotypes rather than the confidence interval. That's because you can expect these estimates to be wider, and it's very possible that several may cross the 0.5 non-inferiority threshold. Yet if the GMRs are between 0.6 to 0.75 or higher for each serotype, prior Phase 3 studies have shown that these ratios are adequate to achieve the non-inferior threshold. We can read some useful insights when looking at the results of the age stratification analysis of the first Phase 2 study. The graph to the left reflects the data we shared in October of last year from the full study population, in which the confidence intervals for the OPA GMRs were relatively narrow. The two additional forest plots show the eight stratified OPA GMRs. In the 16 to 64-year-old cohort, shown on the far right of this slide, we had approximately 50 subjects. The results show a general improvement in the point estimates, which is encouraging, and as expected, a significant widening of the confidence intervals due to the smaller sample size. These confidence intervals are relevant because we enrolled approximately the same number of subjects per cohort in the 65 and older study. When we announced our top line data from the older adult study, given precedent Phase 3 programs that have enrolled subjects both older and younger than 65. We also plan to share pooled data that includes the results from the 60 to 64-year old cohort in our prior study. Based on well-established development pathways, we anticipate the Phase 3 study design will include the same validated surrogate immune endpoints that have served as the basis for full approval of multiple prior PCVs. These were also the basis for our positive Phase 2 study. We expect top line data from that pivotal Phase 3 non-inferiority study in 2025 and we will keep you apprised of other milestones following the planned regulatory interactions in the second half of this year. As a result program advances, we are also excited to move into the infant population with VAX-24 and plan to initiate a Phase 2 study in the second quarter of this year. This study, outlined on slide 13, includes three doses given to healthy infants in the first six months of life. This is referred to as the primary series. The primary series is followed by a dose administered at 12 to 15 months of age, which is referred to as the booster dose. This study will be conducted in two stages, and we will compare VAX-24 to the broadest standard-of-care PCV, which today is PCV-15. The stage one portion of the study will evaluate the safety and tolerability of a single injection of VAX-24 at three-dose levels compared to PCV15 in approximately 48 infants at two months of age in a dose escalation manner. Participants will be randomized on a 3:1 basis and will be evaluated for safety at seven days after dosing. A data safety monitoring committee will evaluate this data, to which we will remain blinded before making a go/no-go decision to enable us to proceed to a higher dose and ultimately to the second stage of the study. The second stage of the study is significantly larger and will enroll approximately 750 healthy infants. We will evaluate safety, tolerability, and immunogenicity for the same three doses of VAX-24 when compared to PCV15. Participants will be randomized equally into four separate arms, with serology drawn for immunogenicity evaluations at seven months and before and after the booster dose. The key pre-specified immunogenicity study endpoints will follow convention, which includes an assessment of the percentage of participants with IgG titers above predefined levels after the primary series and the IgG geometric mean concentrations after the booster dose, both of which will be compared to PCV15 for the common serotypes. We expect top line data from this study following the primary three-dose immunization series by 2025, with the top line data from the booster dose to come later. As Grant noted, we also continue to advance VAX-31, our 31-valent PCV candidate designed to provide coverage of approximately 95% of the IPD currently circulating in the U.S. adult population. We've now identified the additional seven serotypes included in VAX-31 beyond the 24 serotypes in the VAX-24 and believe this breadth of coverage goes beyond any other PCV in development. We are completing IND-enabling activities and intend to submit the adult IND in the second half of this year. With that, I'll turn it over to Jeff to provide an update on our early-stage program.

Thanks, Jim. In addition to our PCV franchise, we also have a robust earlier stage pipeline for which we continue to leverage our cell-free platform. VAX-A1, our novel conjugate vaccine designed to prevent infections caused by Group A Strep, remains highly relevant given the recent outbreaks that have captured news headlines. Group A Strep is one of the leading infectious disease-related causes of death and disability worldwide and is a significant contributor to the prescription of antibiotics in the very young. IND-enabling activities continue as VAX-A1 advances to the clinic. These include analytical assay method development, immunological assays, and scaling up the processes towards the production of GMP grade drug substance and drug product. We will give updates as to the anticipated timing of the IND submission as the program advances. I'm also pleased to share that we have achieved our goal last year to name a final candidate for VAX-PG, our therapeutic vaccine candidate designed to treat periodontal disease. Periodontal disease impacts approximately 65 million adults in the U.S., resulting in productivity losses that are estimated at more than $50 billion per year. As we await the readout of our final preclinical studies, we have begun the scale-up of the production of our candidate vaccine proteins, analytical assay development, and clinical serology assay development necessary to support eventual early-stage clinical studies. VAX-PG leverages a key application of our cell-free platform, which is the ability to make tough-to-make protein antigens. This also has a bearing on the nomination of our new vaccine program, VAX-GI. VAX-GI is designed to prevent dysentery caused by Shigella bacteria, which is commonly referred to as shigellosis. Shigellosis is a bacterial illness with no available definitive treatment. It affects an estimated 188 million people worldwide each year and results in approximately 164,000 deaths annually, mostly among children under five years of age in low and middle-income areas. With the aim of reducing morbidity and mortality due to this disease, the WHO lists Shigella vaccine development as a priority goal. The central antigen in VAX-GI is IpaB. While this is a well-appreciated antigen, others have been unable to produce IpaB at an amount sufficient to enable a commercial product. Yet with our cell-free technology, we believe we can produce this antigen at substantially improved yields, allowing for commercial-scale production. We look forward to sharing more updates on our earlier-stage pipeline as the year progresses. I would now like to turn the call over to Andrew, who will provide a financial update.

Thanks, Jeff. I'll briefly cover a few financial points, before turning it over to Grant for our closing remarks. With respect to the income statement, the details of our fourth quarter and year-end 2022 results and the reasons for the variances to the comparable 2021 periods are reflected in our 10-K filing and summarized in our press release. The year-over-year increase in R&D expenses was due primarily to higher manufacturing and clinical development expenses for VAX-24 as we invested to prepare for the planned Phase 3 clinical trials and initiated and completed enrollment in two Phase 2 clinical studies; higher manufacturing expenses for VAX-31, as we advance that program toward our anticipated IND application submission; and increased personnel-related costs in our R&D organization to support these key initiatives. The increase in G&A expenses was driven principally by higher personnel-related and corporate costs as we invested in our team and infrastructure to support our overall growth. I will note the $23 million charge we incurred in the fourth quarter related to the agreement we entered into with Sutro Biopharma during that period. This amount reflects the upfront cash and stock consideration for the expanded rights we acquired and the option we have to acquire additional rights. The entire upfront consideration was expensed in the fourth quarter. As we look forward, we expect a substantial increase in 2023 expenses over full year and Q4 2022 annualized levels, excluding the $23 million Sutro charge, particularly in R&D. The expected significant increase in R&D expenses is primarily a function of our investment to make the required clinical trial materials for our planned VAX-24 Phase 3 program, which will consist of multiple trials and to a much lesser degree, expenses related to executing our VAX-24 infant Phase 2 study, preparing for our planned VAX-31 adult Phase 1/2 study, activities to support a future BLA for VAX-24, and an increase in employee headcount to support our anticipated growth. Turning to the balance sheet and cash runway. As Grant noted, we continued to maintain a strong financial position, ending 2022 with $957.9 million in cash, cash equivalents, and investments. Going forward, we expect that our balance sheet will be sufficient to fund our operating expenses and capital expenditure requirements through a number of important milestones over the next few years, including the top line pivotal VAX-24 Phase 3 non-inferiority study in adults, for which data is expected in 2025. As we've noted before, our cash runway outlook does not reflect the potential costs associated with securing additional manufacturing capacity to support certain components of our vaccine, expected increased commercial quantities upon the potential approval and launch of VAX-24 in the infant population, and to expand into other markets outside of the United States. We continue to evaluate our alternatives to bring on such additional capacity. I will now turn it over to Grant for closing remarks.

Thanks, Andrew. It was an extraordinary year of validation for VAX-24 in our pipeline, and we are in a position to maintain our strong momentum in 2023. We expect this to be a milestone-rich year across our pipeline with a focus on VAX-24 and VAX-31. We look forward to sharing further updates as the year progresses and appreciate your interest by joining us today. With that, let's take some questions.

Thank you. Our first question will be coming from Jason Gerberry of Bank of America. Your line is open.

Hey, guys. Thanks for taking my questions. My first question is just as you move VAX-24 into pediatrics, just your thoughts on the biggest risk, the translatability of vaccine efficacy going to the pediatric population with a higher valence product. And then my second question, just wanted to get your thoughts regarding the recent ACIP panel and this discussion on Pfizer's PCV20 in pediatrics. And if the FDA ultimately agrees with Pfizer's view on the totality of data and coverage at the fourth dose, might that in any way alter how you're thinking about pediatric development of VAX-24? Thanks.

Yeah. Hey, Jason. Thanks for the question. There's been a long history of PCV development initially beginning in pediatrics and then graduating to adults and then more recently, starting in adults and then going into pediatrics. And there's been remarkable consistency using the same formulation whether it was Prevnar or Merck's version Vaxneuvance, where they were able to take the exact same dose and same formulation in both infants and adults. Obviously, a different number of doses more being administered to kids. But there's been very good translatability across the age groups historically. But I think what we have seen consistently is a bigger drop as expanded valence PCVs had gone from adults down to kids. And as you referenced, that was the subject of the discussion at last week's ACIP meeting, where the conclusion of the working group was, on the one hand, we have the improved coverage of PCV20. But on the other hand, you have higher immune responses with the 15-valent for Merck. So that's the trade-off that's being required with the conventional technology, and that's what has us so excited about the data that we generated last fall where VAX-24 was able to show broader coverage, but in fact better immune responses against the common strains of the less valent vaccine. So, that's the existential choice that they're being forced to make. And the working group basically didn't really indicate how they are going to act, but that's the trade-off that they're going to have to consider if the April PDUFA date comes and the FDA approves Prevnar 20.

Got it. Thanks guys.

Thank you. One moment while we prepare for the next question. Our next question is coming from Roger Song of Jefferies. Your line is open.

Great. Congrats for the Q and thanks for taking the question. Maybe just a quick two questions related to the statistics. So, for the upcoming Phase 2 data readouts, understanding you want to focus on the point estimate, given the smaller size, but maybe can help us to conceptualize what is the level of point estimate you need to hit in order to have a reasonable chance in the Phase 3 to hit a non-inferiority; that's number one. Number two is in terms of the sample size for Phase 3, seems you are targeting around 1,000 patients. How should we think about with different data scenarios in terms of the non-inferior versus the superior for some serotypes? Thanks.

Yeah. Hey, Roger. Thanks for the question. Yeah. As Jim was touching on in the prepared remarks, what we've seen consistently in the historical Phase 3 studies for the adult space is that you can have as low as a 0.6 point estimate on a relative basis for your vaccine versus the standard-of-care, which would be Prevnar 20. And that has been about the minimum amount you need to show to make room for the confidence intervals on either side. As we're approaching that 65-plus readout, those are the sort of point estimates we'll be looking to exceed. As we saw from the larger study that we read out in the fall, we are well in excess of those. So, we're feeling reassured as we did the pre-specified stratification and we're able to look at the 60 and 64-year-old age cohort. I think we feel like we're tracking. And then last week, the pediatric data for PCV20 was released. And once again, we saw that they could go down as low as 0.6, which they are at for a few strains. Again, that was adequate to exceed the non-inferiority threshold. So, I think we're seeing that sort of consistency across adults and pediatrics that has been a bit of a hallmark in this space. And then, Jim, why don't you take the second part about superiority?

Sure. I believe that what we observe in the 50 to 64 age group is also applicable to those aged 65 and older. We are confident that in Phase 3, we can demonstrate similar statistical superiority in that group. If we can replicate what we have seen in the 50 to 64 age range during Phase 3, we could achieve a statistical significance as high as eight or nine, depending on what the FDA requires for the lower bound to show superiority. If the lower bound is 1.0 or higher, we are optimistic that we can reach seven or eight of those results.

That’s great. Thank you.

Thank you. One moment while we prepare for the next question. Our next question will be coming from David Risinger of SVB. Your line is open.

Thanks very much. And thank you for the updates. So, I have two questions. First, obviously, you're planning Phase 2 in infants with Vaxneuvance as the comparator. But assuming Prevnar 20 is approved in infants in April, and it's given an equal recommendation to Vaxneuvance by the ACIP this summer, should we just assume that down the line in a couple of years, you would ultimately run a Phase 3 in infants versus Prevnar 20? And then second, just to follow up on Jim's comment a moment ago. Why would the lower bound be different for your Phase 3 in adults? I think you had said if the lower bound was 1.0 or greater, you might be able to hit seven to eight of those or something? I just wanted to understand that a little bit better. Thank you.

Thank you for the question, David. The recent ACIP discussion suggests that PCV20 is moving toward approval, and we will know more when the FDA makes its decision in April. We are also looking forward to starting our Phase 2 clinical study in the second quarter of this year, which will have two stages. The first stage will focus on safety, where we plan to compare to PCV15. If a joint recommendation is given, starting against PCV15 will suffice. However, there is precedential guidance from the agency that has prompted comparisons to the broadest spectrum standard-of-care vaccine available. We are preparing for the possibility of switching our comparison from PCV15 to PCV20 in the second stage of the study, and this will be coordinated with each investigator involved. Based on our discussions with the FDA, while we could consider an alternative comparison, their preference seems to lean toward the broadest spectrum vaccine. We are working to potentially adjust our original plans as the situation with the FDA and ACIP develops. Regarding your second question about the lower bound, the technical lower bound threshold for establishing non-inferiority still requires it to exceed 0.5, which is also the minimum needed for the lower limit of the 95th confidence interval. If the point estimate is at 0.6, that typically allows the lower limit to exceed 0.5. Was your question more focused on superiority? Jim, would you like to elaborate?

Yeah. So, for the superiority, what I've seen in the past year is that sometimes the FDA wants to take into account some assay variability because if they're going to put a statistical superiority claim in your label, they want to make sure that you're absolutely sure that it's superior. So, it wouldn't be materially higher than 1.0, but it might be slightly higher to give some degree of leeway in case there's some assay variability. So, we don't expect it not to be 1.0, but even if it's even higher, I think we can achieve at least four and more. And even if we aren't able to get a superiority play in the label, that absolute immunogenicity value will then reset the bar for others to demonstrate non-inferiority again. So, even if it's not on the label, we'll have raised the bar for others who want to follow to demonstrate non-inferiority.

That’s very helpful. Thank you very much.

Thank you. One moment while we prepare for the next question. Our next question is coming from Seamus Fernandez of Guggenheim. Please go ahead.

All right. Thanks. Thanks so much for the question. So, really wanted to drill in a little bit to VAX-31. Just hoping you guys could provide us with a little bit of color on what it's going to take to get that IND through, expand the manufacturing to the 31-valent targets? And then separately, I was just hoping you might help us understand where you see the real differentiation opportunity for VAX-31. My impression was that the team was really thinking about some unique opportunities, particularly in otitis media as an opportunity there. So, just love to touch on VAX-31. Thanks.

Yeah. Thanks for the question, Seamus. As it relates to the VAX-31 program, we've guided to an IND going into the second half of this year. These adult studies accrue and read out quickly. We have guided to being in receipt of top line data from that study next year in 2024. In order for us to be able to guide to an IND in the second half, it means we're well on our way from a manufacturing perspective. We've said publicly that we made a surplus of the 24 drug substances that are in both VAX-24 and VAX-XP. So what we've been in the process of doing is manufacturing the incremental seven polysaccharides and then conjugates and then doing the drug product formulation work. So what we've said in other conversations is that we're well on our way. We've made all the polysaccharides under GMP. We've made the conjugates and now we're heading towards the drug product formulation stage. So far, so good, and as per today, we're maintaining that guidance of second half IND filing. We're really excited about that, and we believe we'll be able to leverage the same Lonza infrastructure for the production of VAX-31 that we've been budgeting for VAX-24. As it relates to the differentiation, maybe Jim and I can tag-team this one. For starters, in the adult space, once you get up to 31 strains, you're effectively covering the evidenced pathogenic serotypes for pneumococci. In the U.S., those 31 conjugates will cover 95% of the circulating disease. In Europe, it gets as high as 98%. So, you really feel like you covered the gamut once you get to these 31 conjugates. What we think we can do with the carrier-sparing technology that we possess is not only scale to cover those newly circulating strains, but not take the pressure off those strains that have historically been pathogenic, but have been brought under control with vaccination currently. This is the big opportunity that we have, and we don't believe we face the same trade-off that the conventional PCV developers are facing where, to get the kind of coverage of newly circulating strains, they have to no longer include those strains that have been taken out of circulation. As we mentioned in the prepared remarks, there's historical precedent where vaccination has been withdrawn for currently covered controlled strain can result in a rebound. It's more than just the coverage advantage; it's also the maintenance of the no longer circulating strains. This is a big opportunity for us in the adult space. Your reference to ota's media is another aspect of the potential advantage as it relates to the infant indication. So Jim, maybe you can talk a little bit about that.

Yeah. And I'd say first in the infant, VAX-31 will increase coverage against IPD by about 25% or more from what would be the standard-of-care if PCV20 makes it through the fluid stage, even more so, it's referenced against PCV15. So, there is still a substantial impact on invasive disease. But in terms of otitis media, especially 35B serotype, there's a lot more contribution to otitis media and these incremental strains that are in VAX-31. You get 48% increase in coverage of otitis media. When you think about it, the incident rate is almost to the point where every kid gets at least one year in the first five years. If about 35%, 40% of those are of Strep, you can see that that's a ubiquitous disease. So, this incremental 48% could have a substantial impact obviously on medical expenses, but also on antimicrobial resistance because it's one of the main drivers for antibiotic prescriptions in this young age group as well. We're excited about this for otitis media.

Thank you. One moment while we prepare for the next question. The next question is coming from Jon Miller of Evercore. Your line is open.

Hi, this is Jon Miller from Evercore. I would like to ask about the manufacturing expansion you've mentioned. You've indicated that you can currently operate only in the U.S. What would be required to establish a larger manufacturing presence? Is this something you can manage internally, or would it involve a larger collaboration with Lonza? Additionally, could you provide some estimates on the potential costs associated with a full-size manufacturing footprint under different scenarios?

Yeah. Hey, Jon. Thank you for the question. We'll tag-team this one as well. I'll have Andrew bring it home. Just in terms of order of magnitude, I think the way people should be thinking about that U.S. adult launch-related capacity in the tens of millions of doses. Whereas when you ultimately get into the full-fledged adult and infant and global reach capacity, PCV demand does get into the greater than 100 million doses per year territory. So, we're talking about that sort of line of demarcation. Then as it relates to the second part of that question, I'm not quite sure how far Andrew will be able to go. I'll hand it to Andrew.

Yeah. Jon, again, thanks for the question. We are looking at different options in terms of strategy. That includes doing it on our own facility, using Lonza, with whom we have a great and longstanding partnership and other CDMO options as well. And obviously, the magnitude will depend on the route we take. When we pull the trigger, that's something over the next 12 to 18 months, we're likely to do, so we can ensure we have the necessary capacity to meet the demand, subsequent to the launch. Probably premature at this time to kind of range the options, but we're hoping to be in a position to do that in the not-too-distant future as we get further down the valuation.

Okay. That makes sense. Is this a sort of thing that you expect Lonza that would have the capacity to do already if you asked them tomorrow to do it?

We can meet the expected demand in the adult population in the U.S. with our existing facilities. As for Lonza, they have dedicated space for their clients, and we would likely need to collaborate with them to develop that capacity. This is something we are currently exploring, but it seems it would be a considerable project.

Understood. Thanks so much.

Thank you. One moment while we prepare for the next question. Our next question is coming from Louise Chen of Cantor. Your line is open.

Hi. Congratulations on the quarter and thanks for taking my questions here. So, one question we asked me to get is since that you've already shared proof-of-concept for VAX-24. And because the market for PCV is getting crowded, why not just move forward with VAX-31? And then second question I had for you was on the market opportunities for VAX-A1, PG and GI, what do you think of those? How do you think about potential peak sales versus what you might see for your PCV? And when do you plan to start studying for these opportunities? Will it be within the next several years? Or after you kind of move through the pivotal stuff with your PCV? Thank you.

Thank you for your question, Louise. VAX-31 has the potential to be a game changer. However, VAX-24 is leading the way with a best-in-class profile for both adults and infants, and it is on the fastest path to market introduction. Our main focus is to successfully launch this vaccine, as we believe VAX-24 will significantly benefit our carrier-sparing PCVs in the market. We anticipate that widespread use of VAX-24 will increase the rate of circulating disease for the strains it targets. While VAX-31 is important and we are advancing it as quickly as possible, we currently believe this strategy aligns best with the company's goals. If any changes arise in competitive dynamics or epidemiology, we would reassess, but we see this approach as the optimal way to maximize value for Vaxcyte and contribute positively to global health. Regarding our pipeline, we are confident in the benefits of our cell-free protein synthesis platform. VAX-A1, our broad-spectrum Group A Strep vaccine, addresses the rising rates of Group A Strep infections and could be a crucial intervention for all ages. We are pushing this program forward aggressively, as it has the potential to be a blockbuster, given the significant morbidity and mortality it can mitigate. As for our other programs, we have chosen a lead candidate for VAX-PG to tackle periodontitis and are eager about the VAX-GI program for shigellosis. Recently, the CDC highlighted concerns about rising antibiotic resistance related to Shigella, making this program particularly urgent. We are advancing these programs as swiftly as possible while prioritizing the value of our PCV. We also plan to introduce more programs from our pipeline in the future.

Thank you. One moment while we prepare for the next question. Our next question is coming from Joseph Stringer of Needham. Your line is open.

Hi. Thanks for taking the question. Just given that there's a competitor 24-valent pneumococcal vaccine program out there in mid-stage development, can you explain the relative importance of potentially being first to market? And do you think that your current timelines for VAX-24 Phase 3 data readouts put you in a good position relative to that 24-valent competitor?

Thanks for the question, Joy. There is indeed another 24-valent vaccine currently undergoing Phase 2 trials in adults, managed by GSK. The key distinction lies in the covalent bond between the polysaccharide sugar and the protein in pneumococcal conjugate vaccines. This bond is crucial as it allows for the simultaneous presentation of both components to the immune system, something non-covalent approaches cannot guarantee. The approach GSK is taking is non-covalent, and they have indicated in their public filings that they do not anticipate launching their program until later in this decade. This places VAX-24 in a favorable position to potentially enter the market significantly earlier than their program. Typically, being a first mover has its advantages unless the subsequent entrants have substantial benefits. In evaluating our strategy and the data we've collected, we believe we have a more established approach. Our immunogenicity data is quite compelling, and our safety profile closely resembles that of the currently approved pneumococcal conjugate vaccines. The strength of these covalently bound vaccines lies in their ability to provide a boost, as the protein carrier and its T-cell epitopes presented together can effectively enhance the immune response. This simultaneous presentation is essential, particularly in the infant market where boosting capability is critical, and we think that importance extends to the adult market as well. We remain aware of the competition, but at this moment, we believe we are in a very strong position concerning this specific program.

Great. Thanks so much for taking our questions.

Thanks, Joy.

Thank you. This concludes today's conference call. You may all disconnect. Everyone have a great day.

Thanks everybody.